For many Americans, the ruling to permit nationwide same-sex marriage had moral or social implications. In all of the excitement, it is unlikely that many celebrants took the time to think about the effect the rule change would have on estate administration and estate planning. The ability to marry goes far beyond simply being able to demonstrate your love. Marriage is also a legal contract that allows the couple to share finances in an entirely different way. Now, a whole new group of Michigan residents will have access to the benefits associated with tax planning through marriage.
Before same-sex marriage was codified into national law, many couple had to cobble together their tax planning efforts. This was particularly stressful for estate planning purposes. Same-sex spouses found themselves having to contend with massive death tax penalties that do not affect married couples. Now, same-sex couples will be eligible for what is known as the “spousal exclusion” — that is, the spouse who dies first leaves all of his or her property to the other party without having to pay a large tax penalty.
Further, married same-sex couples will now be able to automatically inherit property upon a spouse’s death even if there is no will. They will be subject to the traditional intestacy laws that govern estate distribution in the absence of formalized documents. This provides a fail-safe in the event that one party fails to complete his or her estate planning documents.
Furthermore, same-sex couples now enjoy the benefits associated with shared health care through employers, the right to divorce, filing jointly on federal and state income taxes, and many, many more. Same-sex couples may benefit from prenuptial agreements, which can also be used for property distribution guidance if one spouse dies. Estate planning used to be such a headache for same-sex couples, especially where living wills and advance directives were concerned. Now, every married couple enjoys the same rights. Estate planning attorneys can help any married couple learn more about the tax implications of their wills, allowing for better asset protection and peace of mind.
Source: Forbes, “Tax, Estate Planning, Benefits Opportunities After Supreme Court’s Same-Sex Marriage Decision,” Ashlea Ebeling, June 26, 2015